You dedicate your life to earning money, building wealth, and securing long-term assets. Along the way, you form meaningful relationships, start a family, and create a life filled with purpose. Then, you find yourself asking: how do you pass it on to your loved ones? Should you prepare a will or opt for a gift deed? While both are effective tools for asset transfer, they work very differently. Knowing the nuances will save your family from future complications. Let’s break it down step by step.

What Is a Will?

A Will is a legal document that outlines how your assets like, property, money, and other valuables will be distributed after your death. You can name beneficiaries and executors who will ensure your wishes are carried out as you want.

Key Features

• Effective After Death: A will only comes into effect after your demise.
• Control Until Death: You retain ownership and control of your assets during your lifetime.
• Modifiable: You can update your will anytime as circumstances change.

Tax Implications in India

• No Inheritance Tax: While India doesn’t levy inheritance tax, stamp duty or registration fees may apply when transferring property.
• Capital Gains Tax: Beneficiaries may pay capital gains tax if they sell inherited property, calculated based on the asset’s value at the time of inheritance.

Advantages of a Will

• Complete Control: Assets remain under your management until your death.
• Flexibility: You can change or update your will as needed.
• Cost-Effective: Drafting a simple will is affordable and straightforward.

Disadvantages of a Will

• Probate Process: Wills require probate, which can be time-consuming and public.
• Potential Legal Disputes: Ambiguity in the will’s language can lead to family conflicts.
• Delayed Transfer: Assets aren’t transferred during your lifetime. 

💡 Always consult a legal expert to draft your will and minimize ambiguities.

What Is a Gift Deed?

A gift deed is a legal document that transfers ownership of your assets like property, money, or valuables immediately to another person. Unlike a will, the transfer happens during your lifetime.

Here’s why a gift deed could work for you:

• Immediate Transfer: Your loved ones can get the asset immediately, ensuring there’s no delay or uncertainty.
• Avoid Probate: Your family won’t have to go through a long and often frustrating legal process to claim the asset as is the case with wills.
• Tax Benefits: If the recipient is a close family member, like your child or spouse, the gift is tax-free. You’ll need to pay stamp duty to register the gift deed, but for many, that’s a fair trade for peace of mind.

Advantages of a Gift Deed

• Immediate Transfer: Beneficiaries get the assets during your lifetime.
• No Probate: Eliminates lengthy legal processes after your death.
• Tax Benefits for Family: Gifts to family members often avoid taxation.

Disadvantages of a Gift Deed

• Irrevocable: Once executed, you can’t reclaim the gifted asset.
• Stamp Duty Costs: Registration involves stamp duty, which can be costly.
• Legal Challenges: Improper drafting or registration can lead to disputes.

💡 Use a gift deed for assets you want your loved ones to benefit from immediately. For assets you wish to retain control over, a will is a better choice.

Will vs Gift Deed: How to Decide?

Choose a Will If:

• You want to retain control over your assets during your lifetime.
• You prefer flexibility to modify your estate plan.
• Cost-effectiveness is a priority.

Choose a Gift Deed If:

• Immediate transfer of assets is important.
• You want to avoid probate.
• The recipient is a close family member and tax benefits apply.

Conclusion

Deciding between a will and a gift deed depends on your goals and circumstances. Now you know that, a Will gives you control and flexibility, while a gift deed ensures immediate transfer and bypasses probate. Choose one that suits your priorities and decide wisely. At the end of the day, what matters most is ensuring your hard-earned assets benefit your loved ones as you intended .

Consult a legal advisor to understand the best option for your needs. Each choice has unique implications, and professional guidance can help you secure your legacy.

At Mitt Arv, we believe in easing every step of the process for  you to secure your legacy with confidence. Our Asset Vault streamlines the process, keeping your assets meticulously organized and your wishes clearly documented.

With Mitt Arv, you can ensure a seamless, stress-free transition for your loved ones, safeguarding their future while preserving your peace of mind.

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FAQs

1. Do Gift Deeds have Stamp duty in India?

Ans: The rate of stamp duty varies across different states in India. It typically ranges between 2% to 7% of the property’s market value. Additionally, a registration fee, usually 1% of the property’s value, is also applicable. 

2. What are taxes on Gift Deeds?

Ans: Gift tax in India is applied when the value of the received gift exceeds ₹50,000 in the financial year. Gifts from non-relatives valued over ₹50,000 are taxable in India. However, gifts from close relatives like parents, spouses, or siblings are tax-free.

3. What is the legal validity of a Gift Deed?

Ans: Gift Deeds in India are primarily governed by the Transfer of Property Act, 1882, and the Registration Act, 1908.